The European Court of Justice: Redundancies - when?

In two recent cases, the European Court of Justice (ECJ) ruled that an employer should have consulted the employees’ organisations before giving notice of changes that resulted in collective redundancies.

The two rulings on collective redundancies concerned the interpretation of the concept “dismissals” in Directive 98/59 on the approximation of the laws of the Member States relating to collective redundancies. In Denmark, the Directive was implemented by the Act on notice in connection with large-scale dismissals.

COLLECTIVE REDUNDANCIES - DUTY TO CONSULT

Under the Directive, an employer must consult the employees’ organisations before deciding on collective redundancies. When calculating the number of dismissals under the directive, it is important how the concept “dismissal” is interpreted.

In the first case, a specialist hospital had changed the conditions for calculation of seniority in connection with a bonus scheme. The employees not accepting the change were dismissed. In the second case, a clinic had proposed a temporary decrease in salary of 15 % as an alternative to the dismissal of 100 employees.

CHANGES IN THE EMPLOYMENT WERE NOT CONSIDERED A DISMISSAL

In both rulings, the ECJ found that the actual notices of amendment - the change of the salary terms - did not constitute such material changes in the employment that it would be considered redundancies within the meaning of the Directive. However, the dismissals of the employees who did not accept the changes were covered by the concept.

In addition, the ECJ found that the consultation of the employees (and their organisations) should have taken place before the decision to dismiss was made and at the same time as the strategic decision to change the pay terms as it should have been assumed that the decision would lead to dismissals.

In relation to collective redundancies, it is interesting that the actual change of the employment is not to be considered an actual dismissal which may trigger off the duty to consult the organisations - of course provided that the employees accepted.

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Marianne Lage

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